Page 4 - FSUOGM Week 08 2021

FSUOGM COMMENTARY FSUOGM

Lukoil makes a second bid

for a Sangomar stake

FAR has postponed a shareholder meeting scheduled for February 18 to

consider the Russian company’s last-minute offer for 100% of its equity

SENEGAL AUSTRALIA’S FAR, a minority shareholder in shareholders were due to convene on February
the Sangomar block offshore Senegal, put off a 18 to vote on approval of the Woodside purchase.
WHAT: shareholder meeting last week in order to con- Lukoil, though, said its offer was conditional on
Lukoil has offered sider a new takeover bid put forward by Russia’s the rescheduling of that meeting and on “obtain-
AUD220mn for 100% of Lukoil. ing minimum acceptances of 50.1% of shares
equity in FAR, a minority FAR unveiled Lukoil’s offer on February 18, and a FAR board recommendation.”
shareholder in Sangomar. the day of the scheduled shareholder meeting, According to the press release, FAR has opted
saying in a press release that the Russian firm to postpone the meeting and has retained Baker
WHY: had made a conditional, non-binding offer McKenzie to advise it on the new offer. “[The
The bid offers some to pay AUD220mn ($174.12mn) for 100% of delay] will enable FAR to clarify the status of
advantages for the the Australian's equity. It reacted cautiously the Lukoil proposal,” it said. “FAR will advise
Australian company. to the proposal, but it also noted that Lukoil the rescheduled date as soon as this has been
had described its offer as “a higher value for determined, noting that the Lukoil proposal has
WHAT NEXT: FAR shareholders than both the proposed only just been received. FAR will provide further
More changes in the sale of the RSSD project to Woodside Energy information to shareholders prior to the share-
shareholder line-up (Senegal) [a subsidiary of Australia’s Woodside holders' meeting being held, and shareholders
are likely, since RSSD’s Energy] and the incomplete proposal from who have already voted will have the opportu-
operator Woodside Remus Horizons.” nity to change their vote if they wish.”
Energy has announced Shareholders in FAR had been due to vote
plans to reduce its stake. on February 18 whether to accept an offer for its Advantages for FAR
stake in Sangomar from Woodside, the opera- The offer from Lukoil, the largest privately
tor of the RSSD venture established to execute owned oil operator in Russia, does have some
the project. Last December, Woodside had said advantages for FAR beyond the fact that it
it intended to pre-empt FAR’s sale of the stake is higher than the bids received from either
to ONGC Videsh Vankorneft, a subsidiary of Woodside or Remus. More specifically, the Rus-
India’s ONGC Videsh Ltd (OVL). Woodside and sian company has offered to provide FAR with
FAR then signed a sales agreement in January of “reasonable financing support” that would allow
this year but had not yet secured shareholders’ the latter to cover its unmet cash call obligations
approval for the deal. to RSSD.
This is not Lukoil’s first bid to join RSSD. “FAR is in default with respect to its January
The Russian company offered $300mn to Cairn 2021 cash call of $19.9mn,” the press release
Energy (UK) in the summer of 2020 for a 40% explained. “FAR is also in default with respect to
stake in the joint venture, only to see Woodside its February 2021 cash call of $24mn. As previ-
pre-empt the purchase shortly thereafter. ously announced by FAR, it has until mid-July
2021 to remedy defaults or risk losing its interest
Other bidders in the RSSD project.”
The matter was slightly complicated by FAR’s Additionally, FAR said, “Lukoil has advised
receipt of a non-binding takeover offer from that it has funds [that] are readily available for
Remus Horizons, a private investment fund, in deployment if its offer proceeds.”
late 2020. Remus had said it was willing to pay Lukoil has also played up the fact that it is
AUD209.6mn ($165.89mn) for 100% of equity already familiar with Sangomar after having
in FAR, provided that the RSSD stake remained attempted to buy Cairn out last year. “Lukoil has
in the latter company’s portfolio of assets. stated that it has a deep understanding of the
FAR has described the Remus offer RSSD project, as it had previously completed
as “incomplete,” and as noted above, its due diligence and entered into an agreement

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